We are now about to witness the first pitch of the top of the ninth. The Fed will issue its MBS buying for the month tomorrow (the eighth business day of the month) and serve up half a trillion dollars out of thin air. These dollars will be used to front USTs to the PDs and fractionally reserve assetsso to keep the system leveraged. What we have seen since the QEX announcement has been a rearrangement of chairs on the Titanic - it's all going down man.
It starts tomorrow and the top half will last until about January 20th. During this time the system will be releveraged by about 10:1 from where it is now. After that and until about March 30th the system will be releveraged again 10:1. The leverage from where we are now will be 100:1.
I think that everyone who reads this blog already knows what is about to happen (all FX is about to get thrown in the furnace of the Central Banks). I think by January 20th anyone paying an ounce of attention will notice that the fiat system is slipping into oblivion (they will notice because of higher gold prices). I think by March 30th everyone will notice (due to significantly higher gas prices).
I am looking at the DXY retesting 81.5 next week and then moving sharpley lower after the Fed not only buys more MBS but loans against them and expands their balance sheet. I think this will cause gold to move higher. It will take silver with it. Oil will move too as it is a part of the complex but it will lag if only by inches.